Dubai: Foreign companies setting up in specialised economic zones or making major investments in strategic sectors such as tourism and manufacturing may obtain full equity ownership, said Abdullah Al Saleh, Undersecretary in the Ministry of Foreign Trade.
His comments clarified a doubt on the draft companies law approved by the UAE cabinet last week. The law will allow the cabinet to issue a resolution specifying the types of businesses and sectors in which a foreign partner may hold more than 49 per cent of a company's capital.
"Picking on what His Excellency mentioned, the law will not provide for a percentage, the law is silent on the statutory restriction; the limitation of 51-49 per cent is not addressed in this law. It has left it to the investment law to cover the percentages for certain businesses. But ... certain business can own the business 100 per cent, sectors like tourism, health care, education which are on top of the UAE agenda as key sectors for the economy this year," said Samer Qudah, partner and head of corporate structuring at Al Tamimi and Company.
"He talked about strategic businesses. If you are the manufacturer of a chip that is unique and would add lots of value to the UAE economy, and you are bringing talent and large capital investment into the country, then you would qualify for an exception from the Cabinet of 100 per cent ownership," he said.
The commercial companies draft law currently does not refer to the foreign direct investment (FDI) law to cover specific points because the new FDI law is yet to be announced, he added.
Reducing barriers
"I would assume that the moment the investment law is out, it would actually refer to the commercial companies law ... they complement each other," Qudah said. "The message that the government is putting across is we are putting in place all requirements that would attract foreign investment and reduce barriers, and ensure that businesses have all ingredients that they need for success."
Currently, there is a maximum of 49 per cent ownership limit for listed companies, and foreigners need a UAE national partner to conduct business, although full foreign ownership is permitted in free zones.
According to Al Saleh's clarification, major projects that set up in specialised economic zones across the UAE could have a 100 per cent foreign equity share.
The specialised economic zones, which include free zones, also include industrial parks that require companies to have a local partner, said Jitendra Gianchandani, chairman and managing partner of business consultancy Jitendra Consulting Group.
